As many readers know, on August 16, Joe Biden signed into law a massive and historic 735-page piece of legislation called the Inflation Reduction Act (IRA). The hundreds of billions of dollars in benefits the IRA will provide to individuals and businesses, summarized below, will be offset, among other new taxes, by a significant new federal tax of 15% on hundreds of corporations a billion who currently have huge revenue streams but pay little or no federal income tax, as well as other new taxes that apply only to wealthy taxpayers. And under the IRA, the IRS will receive $203.7 billion in new funds to enable it to better audit, among other taxpayers, the tens of thousands of wealthy individuals who are currently illegally avoiding federal income tax. revenue.
As for IRA benefits:
First, for those covered by Medicare, the IRA provides massive savings on pharmaceutical costs that will primarily benefit low- and middle-income people. Although with varying effective dates, it does so by phasing in a cap on out-of-pocket drug costs, setting a $35 cap on the monthly insulin supply, and allowing the federal government to negotiate with pharmaceutical companies the cost of pharmaceuticals that the federal government purchases. It also expands key provisions of the Affordable Care Act.
Second, it provides massive new federal income tax savings to a wide range of companies whose research efforts, products and services help fight global warming.
What will be the main benefits of the IRA for New Hampshire business owners? Many socially-minded New Hampshire business owners will celebrate the IRA for non-business reasons, namely for its impacts on health care costs, environmental benefits, and tax fairness.
However, from a purely business perspective, many New Hampshire business owners will also celebrate the enactment of the IRA because their businesses are engaged in one or more of the many business activities eligible for federal tax credits on IRA income. (Tax credits aren’t simply deductions from taxable income; they’re dollar-for-dollar income tax reductions.) New Hampshire businesses will benefit from the IRA if, among other things, they directly or indirectly :
Support the production of solar, wind, marine or geothermal energy;
Produce and sell any other form of clean energy, including nuclear energy;
Manufacture, purchase or use carbon capture equipment;
Are engaged in hydropower generation technology; Where
Support the production of wafers and photovoltaic cells, solar-grade polysilicon, polymer backsheets, solar modes, wind power components or batteries and energy-efficient battery cells and modules.
In addition, special federal tax benefits are available under the IRA for companies that fight global warming and whose factories or projects are located in low-income communities and brownfields.
In summary, all New Hampshire businesses that manufacture or sell any of the types described above, manufacture components for these products, research them, or purchase and use these products are likely to receive substantial benefits from the IRA.
However, these businesses should be aware that the federal income tax requirements they must meet to obtain the tax benefits of the IRA can be very complex: for example, to qualify for the tax credits of IRA, they may have to meet very detailed federal wage and apprenticeship requirements.
I am an LLC attorney, not an expert in advising business owners on how to qualify for IRA tax credits. However, if your company wants to obtain and maximize IRA credits and you have not yet found such an expert, please let me know. I’ll help you find one.
I can also help you find an expert to maximize, under the recently enacted CHIPS (Creating Helpful Incentives to Produce Semiconductors for America Fund Act) Act, the huge federal loans and grants available to US companies engaged in any way or in the semiconductor industry.
These loans and grants provide America with powerful new weapons in our high-tech competition with China.